Despite its stellar performance, the logistics market is facing the same challenges as the others: an increase in construction costs, high inflation, rising energy and fuel prices, all of which might translate, eventually, into higher rents for customers.
Transportation costs are currently the most important, as they have the biggest impact. “It takes an 8% increase in fixed facility cost, in order to equal the impact of just a 1% increase in transportation costs,” Victor Răchită, Head of Industrial & Logistics at CBRE said during CEDER 2022.
As Joanna Sinkiewicz, Head of Industrial & Logistics CEE at CBRE pointed out, Romania is the only country în the region which didn’t report an increase in rents, according to the most recent statistics for the first quarter of 2022 in CEE.
“Everywhere else, logistic rents increased across the region from 20 to 80 euro cents/sq m, which is significant”, she said.
Ian Worboys, Head of European Logistics at Trammell Crow Company, explained that in the US, his company has seen rents rise by 30% per annum in the logistics sector.
“In a sense, it’s not sustainable not to have rises, because construction and transportation costs are going up,” Worboys said. Trammell Crow Company is one of the largest US developers, with 10 to 15 billion dollars worth of projects under construction each year.
Gijs Klomp, Business Development Manager at WDP, agrees: “We have supply constraints and higher costs. Of course, our business model is to make a certain margin, which is now under substantial pressure, so we will see rental growth in Romania as well.”
However, he specified that Romania has very strong fundamentals in near-shoring and certain countries like Serbia or Hungary, with which it is competing, are less attractive at the moment, which puts Romania în a good position.
However, Romania is an emerging market and there are lots of businesses considering relocating here.
“There is big pressure on price. I believe we are on the low side and it will be only rising, especially due to our positioning. Plus we are the best placed to be a regional hub. We have a lot of room to grow and we will seize the moment”, Andrei Koszti, Regional Commercial Manager at CTP Romania concludes, adding that “the most important thing is to be flexible, to adapt, to offer the space when the clients needs it and to speed things up, because the market is moving.”
